Telecom operators want the government to repay the input tax credit (ITC) of about Rs 35,000 crore, cut tariffs and waive GST on license fees and spectrum usage in the coming budget.
According to pre-budget recommendations from the telecom sector COAI, whose members are Vodafone Idea, Bharti Airtel and Reliance Jio, the telecom sector wants the government to suspend the Universal Service Obligation Fund (USOF), which financially supports the roll-out of telecom services in rural areas. area, to reduce the burden on service providers.
“Reimbursement of unused ITC of Rs 35,000 crore from industry, which cannot be used in the near future. The current market dynamics have led to the accumulation of huge ITC.
“The credit would further increase with significant capital expenditure ahead to further enhance the customer experience and realize Digital India’s vision,” said COAI.
Currently, license fees paid by the telecom operators, calculated as 8 percent of telecom service revenues, are referred to as technically adjusted gross revenues (AGR).
The government has removed several revenue heads that were part of AGR, as well as the spectrum usage fees (SUC) on radio waves that will be bought in the future auctions as part of the telecom reforms.
“We thank the government for the recent forward-looking structural and procedural reforms, which we believe will not only bring stability and sustainability to the sector, but also facilitate citizens’ digital needs.
“The telecom industry needs investment in a robust and reliable communications infrastructure to meet the rising demand for connectivity. There is an urgent need to reduce tariffs on the sector,” said COAI Director General SP Kochhar.
The Cellular Operators Association of India (COAI) urged the government to cut license fees from 3 percent to 1 percent and cut the SUC rate by 3 percent on spectrum acquired in previous auctions.
“The current license fee is 8 percent of AGR, including a 5 percent levy for USO Fund. The existing USO Fund corpus, which is over Rs 59,000 crore, is enough to meet the USO targets for the coming years. Contribution to USO may be suspended until the existing corpus has been used,” said COAI.
The industry association said about 85 percent of the country’s telecom equipment is imported and basic customs duties (BCD) of 20 percent are levied.
“Higher customs duty on telecom equipment disrupts cost-effectiveness for telecommunications companies. Telecom equipment should be exempted from BCD.
“Until good quality equipment is available in India at affordable prices, customs duties for 4G/5G related network products, along with other related products, should be reduced to zero,” said COAI.